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Faxon’s EMI business plan expected this month
By CMU Editorial | Published on Monday 12 July 2010
According to the New York Post, newly appointed EMI Group CEO Roger Faxon could have his new business plan ready to share with owners Terra Firma within the month. As previously reported, Faxon, formerly the boss of EMI Music Publishing, was rather suddenly elevated to a group-wide role last month, meaning he now oversees the London major’s flagging recordings business too.
At the time Faxon’s sudden promotion was spun as a well thought out strategic move to bring the major’s recordings and publishing businesses closer together – previously EMI’s two main divisions, in common with all of the music majors, operated pretty autonomously.
While there is a logic to such a strategy, insiders say talk of EMI becoming an integrated “comprehensive rights management company” was a last minute bit of spin to justify why Terra Firma were suddenly pushing out Charlie Allen – who had only been running EMI’s recordings division since March – and to cover up for the fact that Faxon had been moved into his new central exec role with just a few days notice, basically because the equity group had run out of ideas.
All of which means Faxon now has to write yet another new business plan for EMI, which needs to satisfy Terra Firma’s increasingly tetchy financial backers, and match the “comprehensive rights management company” press release already issued.
It was thought Faxon planned to have that business plan ready for September, but according to The Post it could, in fact, be ready to share with Terra Firma twonks, including top twonk Guy Hands, by the end of the month. Although there will presumably be at least one section outlining how EMI plans to become a “comprehensive rights management company”, the Post reckons the main part of the plan will deal with raising quick cash and cutting costs.
In that regard, variations of two previously mooted plans are expected to dominate.
First, EMI recordings will look to do distribution deals with other majors in certain territories, reducing the company’s own costs in those regions and possibly resulting in an upfront advance from the distribution partner. Second, EMI publishing will securitise some of its catalogues, allowing stakes to be sold in those catalogues to third parties in return for upfront cash.
Both proposals are watered down versions of previously discussed cash solutions for EMI, ie doing a licensing deal for the entire EMI recordings catalogue in North America, and spinning off the whole of EMI Music Publishing and selling a stake in it to another equity group.
As previously reported, while Faxon is actually quite a popular choice to lead the whole of EMI, and while on paper both the company’s publishing and recordings divisions are doing quite well, the major’s financial position remains wobbly, because of that three billion pound debt to Citigroup, the bank Terra Firma will see in court this Autumn. Even optimists are now seeing Faxon’s business plan as EMI’s very last chance to remain a stand alone entity.
